French automaker Renault on Wednesday reported a 20.6 percent slide in first-half net earnings but said overseas sales had shot up 10 percent and that its operating margin had improved.

Renault's first half net profit came to 1.317 billion euros (1.8 billion dollars) compared with the same period last year.

But the company's operating margin rose to 3.5 percent of sales after 2.8 percent in first half 2006, an improvement reflecting a cost-cutting drive. For the full year the company sees a margin of 3.0 percent.

Renault chief executive Carlos Ghosn said he was confident a company plan, dubbed Renault Commitment 2009, would secure an operating margin -- the difference between prices received for a company's products and the cost of producing them -- of 6.0 percent in 2009.

He added that the margin stood a good chance of reaching 4.5 percent in 2008.

Operating earnings edged up to 689 million euros from 649 million in the January-June period of 2006, Renault said.

The contribution to the earnings performance made by Nissan, Renault's Japanese partner, fell to 615 million euros from 1.013 billion in first half 2006.

Overall sales in the period shrank 1.4 percent in value to 20.562 billion euros.

But Renault finance director Thierry Moulonguet pointed to a 10 percent gain in international sales, notably in the Americas, and to the "good performance in the utility range," where profit potential is high.

Sales by volume fell "significantly" -- 9.1 percent -- in Europe over the first half, Moulonguet said. Globally the volume of sales was down 3.7 percent compared with the same period of 2006 at 1.27 million vehciles.

Outside of Europe, sales volume increased 10.2 percent.

Renault also cited the positive showing of its economy car, the Logan, which has recently been introduced in India.

Ghosn predicted that Renault would have no serious competitors for the Logan before 2009.